MINUTES OF THE
SENATE Committee on Government Affairs
Seventy-second Session
April 30, 2003
The Senate Committee on Government Affairs was called to order by Chairman Ann O'Connell, at 2:08 p.m., on Wednesday, April 30, 2003, in Room 2149 of the Legislative Building, Carson City, Nevada. The meeting was videoconferenced to the Grant Sawyer State Office Building, Room 4412, 555 East Washington Avenue, Las Vegas, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.
COMMITTEE MEMBERS PRESENT:
Senator Ann O'Connell, Chairman
Senator Sandra J. Tiffany, Vice Chairman
Senator William J. Raggio
Senator Randolph J. Townsend
Senator Warren B. Hardy II
Senator Dina Titus
Senator Terry Care
GUEST LEGISLATORS PRESENT:
Assemblyman Joseph (Joe) Hardy, Assembly District No. 20
Assemblywoman Kathryn (Kathy) A. McClain, Assembly District No. 15
Assemblyman Tom Collins, Assembly District No. 1
Assemblyman David R. Parks, Assembly District No. 41
Assemblyman David F. Brown, Assembly District No. 22
Assemblyman David E. Goldwater, Assembly District No. 10
STAFF MEMBERS PRESENT:
Michael Stewart, Committee Policy Analyst
Scott Wasserman, Committee Counsel
Alice Nevin, Committee Secretary
OTHERS PRESENT:
Bruce L. Woodbury, Board of Commissioners, Clark County
Jacob Snow, Lobbyist, General Manager, Regional Transportation Commission of Southern Nevada
Michael S. Lasko, Project Manager, CH2M HILL Companies, Limited
Susan Martinovich, Assistant Director, Engineering Division, Nevada Department of Transportation
John Madole, Lobbyist, Associated General Contractors, Nevada Chapter
David Howard, Lobbyist, City of Reno
Richard Daly, Lobbyist, Laborers International Union of North America Local 169
James E. Sala, Lobbyist, Southwest Regional Council of Carpenters
Ted J. Olivas, Lobbyist, Nevada Public Purchasing Study Commission
Derek W. Morse, Lobbyist, Deputy Executive Director, Washoe County Regional Transportation Commission
Steve G. Holloway, Lobbyist, Associated General Contractors
John E. Jeffrey, Lobbyist, Southern Nevada Builders and Construction Trades Council
Ivan R. “Renny” Ashleman, Lobbyist, Clark County
Rose E. McKinney-James, Lobbyist, Clark County School District
Gub Mix, Executive Director, Nevada Manufactured Housing Association
Terry Johnson, Labor Commissioner, Office of Labor Commissioner, Department of Business and Industry
Irene E. Porter, Lobbyist, Southern Nevada Homebuilders Association
James E. Keenan, Lobbyist, Nevada Public Purchasing Study Commission
Justine A. Chambers, Lobbyist, City of Carson City, and Nevada Public Purchasing Study Commission
Wesley Smith, Operations Manager, New-Com Incorporated, doing business as MMC, Incorporated
Angela Ziel, Lobbyist, Associated General Contractors
Santana Garcia, Lobbyist, Southern Nevada Water Authority
Christopher Beck, Project Manager, Frehner Construction Company, Incorporated
Beryln Miller, Lobbyist, Nevada Contractors Association
Mark Elicegui, Chief Construction Engineer, Nevada Department of Transportation
Dan Musgrove, Lobbyist, Clark County
Madelyn Shipman, Lobbyist, Washoe County
Chairman O’Connell:
I will open the hearing onAssembly Bill (A.B.) 401 first today in order to accommodate testifiers in southern Nevada.
ASSEMBLY BILL 401 (1st Reprint): Allows public body or Department of Transportation to authorize private entity to develop, construct, improve, maintain or operate transportation facility. (BDR 28-798)
Assemblyman Joseph (Joe) Hardy, Assembly District No. 20:
I have provided a handout entitled “Assembly Bill 401 Introduction” (Exhibit C). This was a very complicated bill. By voter initiative, Boulder City approved a bypass to allow trucks to go around the city. This was because there was increased truck traffic in our area; in fact, trucks were coming through the city all the time.
Boulder City’s truck problem was solved when September 11, 2001, occurred, but Laughlin and Bullhead City, Arizona, got the problem. Recognizing when the Hoover Dam bypass bridge is done and the trucks will come back through Boulder City, we felt we needed a truck bypass. I asked what Boulder City could do to allow the traffic to flow without it going right through the town of Boulder City. People like Mike Lasko, who grew up in Boulder City, began to discuss the concept of design-build.
Assembly Bill 401 will protect prevailing wages on design-build projects and permit a public body or the Nevada Department of Transportation (NDOT) to authorize a private entity to develop, construct, improve, maintain or operate, or any combination thereof, a transportation facility. We defined transportation facility to include what I am interested in, a road. It also allows a single-step selection process on public or NDOT design-build projects.
The proposed revisions for A.B. 401 incorporate the Federal Highway Administration’s final rule on design-build, dated December 10, 2002. This will bring us up to date with the federal government’s standards and statutes.
The bill also allows for unsolicited proposals in public-private venture proposals. I want to thank Susan Martinovich of NDOT, who created the possibility of the language in the bill to make it effective. This bill is permissive, and there are many “mays” in the bill. Without the “shalls,” it allows the public entity to do something in a permissive way without forcing the entity to accept an unsolicited bid. Unsolicited bids could be accepted, but they do not have to be accepted. A private entity would be required to provide long-term quality in a transportation facility and meet a level of performance over a sufficient duration of time as to provide a value to the public.
Assembly Bill 401 would also amend a current bracket of $5 million to $40 million, to a bracket of $2.5 million to $20 million. This would allow smaller contractors an opportunity to get their feet in the door. Many people have been instrumental in bringing this bill to pass: Mike Lasko, Steve Holloway, Jack Jeffrey, Steve Hill, Las Vegas Monorail, Reno ReTRAC, Jake Snow, Bruce Woodbury, and the list goes on. People have given a lot of thought and time to this idea.
The handout (Exhibit C) contains examples of design-build projects in public-private ventures in Nevada. The Reno ReTRAC Project is the most notable one being constructed at this time. They talk about the concept of best value in design-build projects. The best value in the Reno ReTRAC Project, of the three bids, turned out to be the lowest bid. The Clark County public works Las Vegas Beltway project through Summerlin saved about 5 to 10 years and $60 million. The Las Vegas Monorail Project is currently being built as a public-private venture, and it is on time and on budget.
California’s Eastern Transportation Corridor project is an example to read about in our paper (Exhibit C). The Arizona Department of Transportation was very pleased with the design-build concept. They explained how the implementation of new technology allowed them to save $60 million and accomplish their project much faster than they would have otherwise. Colorado is one of the leaders in the concept. They are working on a light-rail system and highway improvements. Page 5 has a statement of design-build benefits.
Bruce L. Woodbury,Board of Commissioners, Clark County:
I am chairman of the Regional Transportation Commission of Southern Nevada. I am here to testify in support of A.B. 401. We hope we can expand the capability of the public sector to utilize design-build contracts. I am presenting my testimony for the record (Exhibit D).
Jacob Snow, Lobbyist, General Manager, Regional Transportation Commission of Southern Nevada:
We have a limited amount of resources to put toward providing a transportation infrastructure in southern Nevada. We support this bill because it allows market‑based provisions to come into play, and we will be able to use market‑based and private-sector dollars to help solve some of our transportation problems. Although we favor the bill, we have some recommended changes to the bill.
Senator Care:
When you talk about market-based provisions, does section 4, subsection 2, paragraph (h), subparagraph (2) of A.B. 401 authorize a toll road, for example?
Mr. Snow:
My understanding is yes, it authorizes the use of toll roads for financing transportation facilities.
Senator Care:
Is there any authority presently for construction of a toll road, or would it require an act of the Legislature?
Mr. Snow:
I do not believe an act by the Legislature would be required to allow toll roads to go forward. To allow it to take place specifically would mean toll roads go on record as being permissive. I am not the authority, but I believe A.B. 401 will codify the authority so it is on the books.
Michael S. Lasko, Project Manager, CH2M HILL Companies, Limited:
We strongly urge you to support A.B. 401. I have provided my testimony for the record (Exhibit E).
Senator Raggio:
What is the reason for the change in the limits for the design-build contract? You are lowering it to $2.5 million, but what is the reason for changing the $30 million to $20 million?
Assemblyman Hardy:
The people who debated and worked on the bill came up with those numbers.
Senator Raggio:
I am asking because the examples of design-build would not be accommodated within those kinds of numbers.
Assemblyman Hardy:
We are talking about two sections of the Nevada Revised Statutes (NRS). The concept of lowering the $5 million to $2.5 million would allow a smaller contractor to get involved with the design-build team concept.
Mr. Lasko:
We looked at the existing language, which provides $30 million as the upper ceiling. In our discussions with the Associated General Contractors (AGC), the unions, NDOT, Clark County public works, and the Regional Transportation Commission of Southern Nevada, we all felt it would be most appropriate to lower the limits to $2.5 million and $20 million to allow a smaller contractor to participate in design-build projects. Each entity or government body has the ability to do at least one project in that range within a fiscal year; and a department or public agency is authorized, through this language, to do any number of projects above the $20 million ceiling.
Senator Care:
Section 5 of A.B. 401, says:
If a public body receives a request regarding a transportation facility … the public body may request other persons to submit proposals to develop, construct, improve, maintain or operate, or any combination thereof, the transportation facility.
I am wondering if anyone has an idea of when the public body would request or not request other persons to submit proposals?
Mr. Lasko:
It is up to the discretion of the public body, entity, or department receiving the unsolicited proposal or public-private venture. They would have the discretion to determine whether or not they feel this meets the public need, is included in the regional or statewide transportation plan, and meets the intent of the desired goals, objectives, and priorities of the governmental body or agency. In the event this proposal is provided to them and is not acceptable, it gives them permission to request additional solicitations.
Senator Care:
Even if the public purpose is determined to be there, I do not know if the public body has to request additional solicitations. I believe it becomes discretionary, at least that is the way I read it.
Mr. Lasko:
That is correct. It is up to the discretion of the public body.
Assemblyman Hardy:
As I understand it, there are some projects where it is important to have federal dollars involved. If federal dollars are involved, it is important you have an “s” behind your proposal because it allows for more proposals. If you are seeking specific funds, it is important for you to have more than one proposal. There are times where you may not be seeking funds requiring it, but other times you will. It is a discretionary kind of thing.
Susan Martinovich, Assistant Director, Engineering Division, Nevada Department of Transportation:
We appreciate the efforts of Assemblyman Hardy and the other parties involved in developing this bill because it does provide another tool to help meet our state’s transportation needs. The Nevada Department of Transportation would like to reiterate Assemblyman Hardy’s statement that the bill allows for a proposal, but does not obligate a public body or the transportation board to actually approve the proposal. We are in support of this bill.
John Madole, Lobbyist, Associated General Contractors, Nevada Chapter:
I am speaking for the northern and southern chapters of the AGC. We want to acknowledge we worked with Assemblyman Hardy and had an opportunity for input on the bill.
Senator Raggio:
I still am confused as to why the limit on authorized projects is reduced from $30 million to $20 million.
Ms. Martinovich:
Under the current law, one project per year falls into the category of the $250,000 to $30,000,000. This actually lowers the threshold so more projects could be done. It will lower the limit from one project per year.
Senator Raggio:
The language on page 6, line 19, of A.B. 401 says: “Each state agency and each department … may contract with a design-build team once during each fiscal year … .” Are you saying this accommodates more by lowering the limit?
Ms. Martinovich:
Yes, because currently the projects you can do once a year fall within $5 million to $30 million; now those limits would be lowered. If a project were at $25 million, it would fall into the one-per-year category; now, you can go ahead and do it as a design-build project. You could have an unlimited number of $25 million projects.
David Howard, Lobbyist, City of Reno:
We want to go on record in support of A.B. 401. As you know, the City of Reno is in the middle of one of the largest design-build projects in the state.
I also want to speak about my former job as public policy director of the Reno‑Sparks Chamber of Commerce. It was my pleasure to be involved in a number of meetings to discuss this issue. We are confident the Reno ReTRAC Project is going to be a complete success. When Assemblyman Hardy brought up the idea, he asked me if I knew anything about the design-build concept and I said no. We talked to the experts in the heavy equipment division of the Granite Construction Company. They are the company handling the Reno ReTRAC Project.
To answer Senator Care’s question, the Reno project is a combination of federal dollars, state tax dollars, sales tax, and a special assessment district. That might be why the “may” is in the bill; it allows flexibility.
Senator Care:
Section 8 of A.B. 401 says the public body may seek federal, state, or local assistance.
I do not know if you are supposed to read section 8 with section 5.
If the project is deemed acceptable under section 5, then the public body may request additional bids or proposals. Other solicitations can be requested. The answer we got was that might be in the bill because there may be an availability, in some cases, of federal funds. Going to section 8 of the bill, it says “The public body may take any action necessary to obtain federal, state, or local assistance for a transportation facility … .” I am assuming section 8 kicks in once section 5 kicks in, if the discretion is not exercised.
Chairman O’Connell:
Mr. Madole, can you clarify this for us?
Mr. Madole:
It would appear that way to me, but without studying it further I cannot give a definitive answer to your question. I will take a look at it and get back to the committee.
Richard Daly, Lobbyist, Laborers International Union of North America Local 169:
The union is opposed to A.B. 401. One of our issues with this bill is on page 2, lines 26 and 27, where it implies and allows for: “Any property that the person submitting the request proposes that the public body condemn.” Senator Care asked about page 3, lines 5 and 6, where it applies and allows for fees to be charged for a toll road. I am assuming the fee would be collected by the private enterprise; if I pay a toll, I would just as soon pay it to the government, if it would help alleviate the state’s financial problems.
On the design-build concept, the projects listed under design-build are being constructed without this bill and I do not think this bill is necessary. It creates another layer of problems. When a person submits an unsolicited proposal to the body, and the body has the discretion to make a decision on the validity or public purpose, I think the person has the right to sue the State. They can say I need a public purpose, just not a high-enough public purpose. There is no objective standard or criteria, and I do not think we should subject ourselves to this. Also, on the design-build projects discussed, public money for a project was known or anticipated. There were public hearings about the meat of the project, private sources of money were added to help finance the project, and it became a city project, a county project, or a State project, to move forward with a public purpose. A contract was selected through a design-build bidding process. This potentially allows an unsolicited developer-owner to say, “Here is my project, this is how I will finance it; if you are too subjective about denying the project, I will sue you.” This could take away the bidding process because now it is not the state’s project or the city’s project, it is the developer’s project.
To build the road around Boulder City, or to add the airport to the monorail system in Las Vegas, these are all good things. I do not think this bill is the vehicle; I think it creates more problems than it solves and I am adamantly opposed to the bill. The northern Nevada building trades union opposes the bill as well as the Operating Engineers Local No. 3 in northern Nevada.
James E. Sala, Lobbyist, Southwest Regional Council of Carpenters:
I would like to address Mr. Daly’s points. I understand Boulder City wants to build a toll road and, if I read this bill correctly, the tolls would be collected by the private entity, and there is no specification on how long or where the money would go. This is a concern to us because, if we have to use the toll road, I would rather see the money go to Boulder City, or to local government rather than a private out-of-state entity.
We are in favor of the design-build concept. You get multiple companies to come together and figure out how to solve the problem, lower the cost, and build a better-quality project. I thought this was a privatization of public works transportation projects like airports, bridges, and roads. I did not know it was a design-build bill. We like to see building taking place because carpenters like to work on those types of projects.
We have several concerns about A.B. 401. We question a single-source bid, where someone comes up with an idea like building a bridge in front of the nuclear repository or the road around Boulder City; they privatize it and charge a fee. One person has an idea, but no one else has a chance to look at it, so it eliminates opportunities.
We understand the transportation problems in the state. We know a lot of work went into this bill, but we are concerned it may not do what it was intended to do. It might open up a can of worms, things that were not anticipated, such as private entities coming into the state and building these projects. I suggest the committee take a hard look at some of the issues before this bill is sent forward.
Chairman O'Connell:
Did you have the opportunity to testify in the Assembly?
Mr. Sala:
I did not testify in the Assembly.
Mr. Daly:
I did not testify in the Assembly either.
Chairman O’Connell:
I will close the hearing on A.B. 401 and open the hearing on A.B. 295.
ASSEMBLY BILL 295 (1st Reprint): Revises provisions governing criteria for determining qualification of bidders on public works of local governments. (BDR 28-747)
Assemblywoman Kathryn (Kathy) A. McClain, Assembly District No. 15:
Assembly Bill 295 was a request from the Associated General Contractors (AGC). It has widespread industry support. The bill establishes criteria to determine the qualifications of bidders on public works projects. Since the first hearing in the Assembly, there were several subcommittee hearings to try to come to agreement on several issues. The current form of the bill was voted out of the Assembly, although I am not sure everyone is happy with the bill at this point. Mr. Olivas will give the details of the bill.
Ted J. Olivas, Lobbyist, Nevada Public Purchasing Study Commission:
I am chairman of the Nevada Public Purchasing Study Commission (NPPSC). This bill has a long history. Certain jurisdictions of the state are required to go through the prequalification of bidders for their public works projects; for local governments, it is an alternate procedure. There are currently four criteria in the law for reviewing contractors’ qualifications. There have been many discussions with the southern Nevada AGC and Associated Builders and Contractors (ABC) to develop additional criteria, so if prequalification is used, there is an adequate review of the contractor’s qualifications. As a nonhome-rule entity, we are limited by the four criteria in the law.
We have gone through the prequalification process for some of our projects, and expanded on the four criteria; however, we felt it would be better if those criteria were more clearly defined. We worked with the AGC and ABC because they are the groups who submit bids to us. We developed the criteria following our discussions.
I will go through the bill very briefly. Section 2 is a new section which allows local governments to use state or local government prequalification lists. For example, if Clark County goes through the prequalification process, a list is developed and theoretically the City of Henderson could use the same list without repeating the whole process. We think this makes a lot of sense.
Section 3 adds an advertising requirement which was not in the law. We want to make sure the public, particularly the contracting community, knows what we are doing and when we are accepting applications. This section provides those requirements.
Section 4 is basically cleanup as a result of adding section 2. Section 5 is a cleanup because of adding sections 2 and 3. The number of criteria was changed from 4 to 13 in section 6, in order to evaluate the number of contractors. Section 6 also eliminates the need to hold a public hearing regarding the criteria because you go down the prequalification path or you do not; if you do, we question the necessity of holding a hearing to discuss the criteria. Sections 7 through 12 are cleanup as a result of adding section 2.
Page 16, section 13, of A.B. 295, talks about how a local government can substitute subcontractors. There has been discussion about the prequalification of subcontractors and it is a debatable point. There is a new provision here saying if a local government decides to use the prequalification process, you can use the criteria to look at subcontractors as well. This has been debated. As it currently stands, we have the ability to substitute subcontractors for any reason; this ties the new criteria to subcontractors if the local government jurisdiction requests it.
Chairman O'Connell:
Are you familiar with the proposed amendment to the bill from Washoe County?
Mr. Olivas:
No.
Derek W. Morse, Lobbyist, Deputy Executive Director, Washoe County Regional Transportation Commission:
This was a very late-coming amendment. Please see “Proposed Amendment to Assembly Bill No. 295” (Exhibit F). We testified at the Assembly Committee on Government Affairs. One of the specific agencies mentioned was NDOT which falls under a different section of the NRS. Through an oversight, it was left out of the amendment language. When I became aware of this, I contacted the Legislative Counsel Bureau and they said they would take care of the problem. I just received the final language from them and there has been no time to circulate it. It is a friendly amendment with no impact on other provisions of the bill.
Chairman O'Connell:
Mr. Olivas, would you look at the amendment?
Mr. Olivas:
It appears to simply be an oversight. It is fine.
Senator Care:
Section 6, subsection 4, of A.B. 295, talks about principal personnel already mentioned in existing law. Is subsection 4 what you already do and this will spell it out in statute? Or is this something more than what you look at currently when you look at principal personnel?
Mr. Olivas:
We have reviewed this provision and written it generically. We felt we needed more definitions and this is our interpretation. When we look at principal personnel, we look at the professional qualifications. Yes, we are using this currently in our prequalification process.
Senator Hardy:
Page 16, section 13, of A.B. 295, speaks about substituting a subcontractor. My concern with this is the prequalification of subcontractors. I understand this language is designed to help resolve some of the issues, but on line 23, page 17, it says the awarding authority can request a different subcontractor for any reason. Am I reading this right?
Mr. Olivas:
That is our interpretation.
Senator Hardy:
The new language, on pages 17 and 18 of A.B. 295, seems to narrow the terms to be considered. Why do we need to say, “Here is the criteria, but you can reject them for any reason.” I do not know if it is redundant, but my concern is it might appear the Legislature intended subcontractors to be prequalified. I have a concern about this issue because it is not my intent to require the prequalification of contractors. I want to make sure it is very clear.
Steve G. Holloway, Lobbyist, Associated General Contractors:
Agencies may currently ask to remove any subcontractor, but they must pay for the cost. This bill would allow them to remove any subcontractor who was disqualified as a result of these criteria without having to pay for it. That is the difference.
Senator Hardy:
I want to be sure, for the record, it is not the intent of this act to require the prequalification of subcontractors.
Mr. Holloway:
“For the record, amen.”
Mr. Olivas:
“For the record, amen.”
Assemblyman Tom Collins, Assembly District No. 1:
I worked to craft this bill as it is currently written. I want to make sure Senator Hardy’s issues are addressed and the criteria are expanded. We had subcommittee meetings to make sure we had the time to create a good piece of legislation.
Chairman O'Connell:
Is there any opposition to the bill?
Mr. Sala:
I am not opposed to the bill. I am opposed to what is left out of the bill. The issue of prequalification has been a long road. When legislation first passed, we started to work with many of the local awarding bodies in southern Nevada; however, some agencies were reluctant. Members of the community, the southern Nevada building trades, and the school district met in late 1999 to look at the criteria. At that time, the school district was having problems building schools. They had contractors and subcontractors; they were coming in late and over budget, and the bids were a mess. It was a problem for our members and contractors who wanted to bid the work, but did not want to enter the quagmire. We thought we would put together prequalification language for the school district, the City of Las Vegas, and Clark County. We were in favor of expanding the criteria to the point where it is now.
Our concern is the two things which were left out of the bill. The first is the ability to deal with subcontractors in the prequalification process. After the project is bid, there may be vested-bidder rights. This means if you remove any subcontractors from the project they can sue you; they can hold up the project, and they can try to get damages and money. Also, it may not solve the problem.
Secondly, if you remove them, even if they do not sue you, you have to pay the difference between the subcontractor bids. It could be another $50,000 or $100,000, which would make the low bidder not the low bidder, because you had to add another $100,000 to the project. Maybe the second low bidder would have been the best to take, but under the circumstances, you could not deal with it.
In the construction industry, 95 to 98 percent of the work done on a construction project is performed by subcontractors, not by the general contractor, even though the general contractor is responsible for the project. The subcontractors’ cumulative bid is what the general contractor submits to an awarding body. If those subcontractors are doing things they should not be doing, or if they are not quality contractors, or if they are cheating workers, or the public body, or the public in general, there is nothing you can do about it. After the bid, unless you include language saying if information is brought forward saying this contractor messed up our last three schools because of a history of violations and poor performance, our general contractors will not use this subcontractor when bidding a project. This is not much different than the labor commissioner does when debarring a contractor or subcontractor from bidding public works.
Mr. Sala:
My second point is the labor commissioner worked very closely with this committee during the last Legislative Session to decentralize the enforcement of public works projects. He gave some powers to awarding bodies to deal with contractors, to fine them and do some oversight on prevailing wage. It was an effort to help his office clean up the mess. It was also designed to give the awarding bodies more control over the construction process to provide better construction. If the ability to deal with subcontractors is not included in the legislation, it leaves out 95 percent of the problem in the construction industry.
As I said, there is not much wrong except what is left out of the bill. We encourage the committee to take a hard look at this. The school district, Clark County, and the City of Las Vegas all currently include language allowing them to disqualify a subcontractor. A few weeks ago, you approved language for the State Public Works Board to do the same thing with subcontractors. Now to turn around and undo what has worked for the past few years seems like an oversight. We are hoping this can be addressed and corrected in this committee.
I have copies of proposed amendments to A.B. 295 (Exhibit G). One deals with the issue of subcontractors and the other deals with the issue of notification of trade associations, labor organizations, and other interested parties who want to be notified when the prequalification process comes up, so they can participate in the process.
Chairman O'Connell:
Were you a participant in the subcommittee meetings held in the Assembly?
Mr. Sala:
Yes, I have been a participant in this process since 1999. I participated in most of the subcommittee workshops and testimony on the Assembly side.
Chairman O'Connell:
Does anyone wish to comment on the two items Mr. Sala feels were left out of the bill?
Mr. Holloway:
As Mr. Sala correctly said, we have been working on the prequalification criteria for 4 years now. It is a series of compromises involving public works agencies and the industry, both labor and management. These two particular criteria were left out. We did not feel the notification of unions and associations, such as the AGC, was necessary. The original prequalification criteria were quite broad and loose. Each agency could then use the broad criteria to develop its individual criteria. We wanted the industry involved in developing those criteria on an individual agency basis, so it was felt that language was necessary. It was removed because it was no longer necessary.
We have agreed on 13 very specific and objective criteria to take the politics out of evaluating a contractor for prequalifications. These criteria are all related to whether the contractor can do the job and are objective criteria. It is not necessary to be involved in a debate as to what criteria they will use because they will all use the same criteria, if they elect to prequalify.
As to the disqualification of subcontractors, these revisions do allow agencies to disqualify subcontractors for any reason they are willing to pay for, and to disqualify subcontractors on the basis of these criteria, if they choose. There seems to be no point in developing a black list of subcontractors who have been disqualified. If they are bad, they are probably going to lose their contractor’s licenses. If they are that bad, the Office of Labor Commissioner can suspend them from bidding on any public works jobs for 3 years. It seemed to be an additional administrative burden on the public agencies and unnecessary.
John E. Jeffrey, Lobbyist, Southern Nevada Builders and Construction Trades Council:
I agree with Mr. Holloway’s comments although I may have a difference of opinion on the disqualification of contractors. In talking to some of the attorneys involved, I have been told some subcontractors may be disqualified before the bid in certain circumstances. The only way the criteria would come into play is if the awarding body chooses to use it. If they choose to use it, they can disqualify a person who does not meet the criteria. If they do not prequalify, they can disqualify a subcontractor for the same reasons they can in the existing law today. I believe the concerns of the previous speaker are covered.
Ivan R. “Renny” Ashleman, Lobbyist, Clark County:
I agree with the previous speakers. There seems to be concern that this interferes with the existing disqualification procedures. Our legal reading is it does not and there is no need for additional language. If someone is brought to our attention who should not be eligible to be a subcontractor, we can do something about it after this bill is passed.
Rose E. McKinney-James, Lobbyist, Clark County School District:
The school district has had a process in place for some time. It is in our procedures, but there is no desire to have it codified in law.
Senator Hardy:
You said you do prequalify subcontractors?
Ms. McKinney-James:
Yes. It is listed in the Clark County School District procedures.
Senator Hardy:
I do not think so. You have the ability to disqualify them, but you do not qualify subcontractors.
Ms. McKinney-James:
No, we do not disqualify them, but the ability to disqualify is set forth in the procedures.
Chairman O'Connell:
I will close the hearing on A.B. 295 and open the hearing on A.B. 245.
ASSEMBLY BILL 245 (1st Reprint): Makes various changes regarding conversion of manufactured home park into individual manufactured home lots. (BDR 22-1080)
Assemblyman Collins:
I am the first sponsor of A.B. 245. I believe this is a good piece of legislation.
Mr. Mix will discuss the bill.
Gub Mix, Executive Director, Nevada Manufactured Housing Association:
I am here to ask your support for A.B. 245. I will provide my testimony for the record (Exhibit H).
Chairman O'Connell:
If landlords wanted to sell whole parcels of property, rather than dividing into different lots, they could not do it with this law.
Assemblyman Collins:
The existing law says they can sell the property and pay for the movement upon proper notice to all residents in the community.
Chairman O'Connell:
Do they first have to allow the individual mobile home owners the option of whether or not they want to keep it?
Assemblyman Collins:
Only if they choose to sell by lot; they can sell the park as a unit, but should they choose to sell a lot, they have to give residents first priority.
Chairman O'Connell:
I will close the hearing on A.B. 245 and open the hearing on A.B. 458.
ASSEMBLY BILL 458 (1st Reprint): Requires payment of overtime to mechanics and workmen employed on public works under certain circumstances. (BDR 28-1304)
Terry Johnson, Labor Commissioner, Office of Labor Commissioner, Department of Business and Industry :
I am here to speak in support of A.B. 458. This bill would clarify a jurisdictional issue. Currently jurisdiction for overtime on public works is filed with the U.S. Secretary of Labor through one of the field offices in the country. This would clarify the labor commissioner can assert jurisdiction over public works projects and taxpayer-financed projects in Nevada. This is a constituent service issue brought forward by Assemblyman Bob McCleary, Assembly District No. 11. It is a good idea because it sends these Nevada citizens to their labor commissioner for relief and assistance, as opposed to sending them to the U.S. Secretary of Labor.
I understand the AGC has proposed an amendment to the bill. I would support that amendment as well. The amendment would clarify payment of overtime and give the employer and the employee the ability to stipulate 4, 10‑hour days without overtime being required, as opposed to overtime being required in excess of an 8-hour day. This bill largely replicates existing language in chapter 608 of NRS, which I currently enforce. The bill is well-intended and I fully support it.
Mr. Madole:
The amendment, “Proposed Amendment to AB 458” (Exhibit I) would amend page 2, line 12, of A.B. 458. It will clarify what I thought was an oversight. We ask the committee to support this bill.
Mr. Daly:
I support the bill and the amendment. I believe there is an oversight on page 2, line 13, where it addresses collective bargaining. There are provisions in most of the collective bargaining agreements to allow for a 10-hour day. We want to make sure we would still be allowed to have it under this law and I am not sure it is clear. The exact language in Mr. Madole’s amendment would clarify 10‑hour days are allowed.
Chairman O'Connell:
Mr. Johnson, do you agree with the comments that the amendment does clarify this?
Mr. Johnson:
I agree. I think it is a well-established practice that workers covered by a collective bargaining agreement first expect to exhaust the remedies through the collective bargaining agreement before seeking relief through a regulatory body, such as the Office of Labor Commissioner.
Chairman O'Connell:
I will close the hearing on A.B. 458 and open the hearing on A.B. 390.
ASSEMBLY BILL 390 (1st Reprint): Revises provisions relating to duties and liability of owner of property relating to sidewalks in public right-of-way abutting his property. (BDR 22-965)
Assemblyman David R. Parks, Assembly District No. 41:
Assembly Bill 390 says local governments shall not require a property owner to maintain, reconstruct, or repair a sidewalk that is constructed and built in a public right-of-way. There are certain cases where this would not apply, such as in planned-unit developments, and where there are other agreements. This bill also exempts property owners from civil action for injury or damage which might occur on a public sidewalk in the public right-of-way, in cases where the individual has not violated or complied with an ordinance adopted pursuant to other conditions listed in the bill.
Chairman O'Connell:
Was there a specific incident which brought this to your attention?
Assemblyman Parks:
The specific situation is within the incorporated city of Las Vegas. Certain individuals have been given a 30-day demand letter to repair or replace sidewalks in front of their homes which have fallen into disrepair, not through any action of the property owner, but simply because of time. It usually occurs in the older neighborhoods.
Chairman O'Connell:
If the sidewalk was there when the property owner moved in, or if the sidewalk was put in through a general improvement district, or if the original builder had paid for the cost of the sidewalk, do any of those things come into play as far as local government is concerned? I know, generally, the home owner is required to put in the infrastructure items around the home. Ms. Porter, could you clarify this?
Irene E. Porter, Lobbyist, Southern Nevada Homebuilders Association:
For the last 40 years, in a typical subdivision, all off-site improvements to include sidewalks and land, are developed by the developer, by the home builder. It is included in the price of the home, so indirectly the home owner initially pays for it. At the time of the subdivision map, the subdivider has to dedicate the land free and clear to local government, including all improvements, after meeting local government standards and inspections.
There is also a warranty period of 1 to 5 years, depending on the location and circumstance. The builder warranties the off-site improvements and may have to return to do repairs. Because it is public right‑of‑way, there has always been a presumption that local government will take over the public improvements from there on. Somebody cannot go out and say, “You cannot walk on my sidewalk.” They are in the public right‑of‑way. The local government would then have the liability and liability caps.
Local governments stumbled onto the problem while doing some right-of-way negotiations with the Regional Transportation Commission of Southern Nevada. In the past 15 years or so, local governments and governments throughout the state, for a variety of reasons, have taken the position the property owner shall now assume the liability for an accident or injury and will assume liability for repair, maintenance, and reconstruction of the sidewalks, and in some cases also streets. Even though the home owner wants this done and dedicates the land, the city is out of this; whether the bill passes or not, there is no liability for the home builder in this case.
In the interest of the general public who often does not know about this problem, there is a cap on liability for local government. An individual home owner’s insurance policy may not cover the public right-of-way and may need a rider in case of accident or injury. Most people are not aware of this and as a result could get sued, although I do not know if anyone has been sued. There was a lawsuit in Summerlin several years ago, a traffic accident in the commercial area on a roundabout, and the Howard Hughes Corporation was sued. Even though it was a dedicated public right-of-way, the Howard Hughes Corporation had the liability for the traffic accident under the current ordinance.
We talked with Assemblyman Parks about this matter. There was an article in a southern Nevada newspaper about maintaining the streets and alleys in the older areas of the city, and revealed the property maintenance all but fell to the property owners in the old neighborhoods. Council members who represented those old neighborhoods were concerned. We brought this to Assemblyman Parks’ attention and he decided to try to fashion a consumer bill so the home owner knows where he stands.
We worked this out in the Assembly and some valid points came about. If you were going to change the land use on a parcel, let us say it is residential commercial, you may have to do some reconstruction which should be the property owner’s responsibility. The property owner should keep the sidewalk free of ice and snow, weeds, and junk. In repair issues, if the property owners caused a breakage, for instance ran their cars over the sidewalk until it broke up, it should be their responsibility. General maintenance, general reconstruction, liability, particularly liability, should be in the hands of the local government. This would be as opposed to the individual home owner, who in many cases probably does not know the liability issue, and certainly could not withstand a large lawsuit of any kind without proper insurance.
Senator Care:
I apologize to the bill’s sponsor. I was talking to Mr. Wasserman about the common law duty you might have if you have a sidewalk on your property. Mr. Wasserman, Assemblyman Parks, and I grew up in areas with lots of snow. Dad would say, “You need to shovel the sidewalk because if someone slips and falls, we will be sued and lose our house.” In Nevada, common law regarding a sidewalk is the property owner does not escape liability if, as owner-occupier, he or she has put the sidewalk to a special use which creates a dangerous condition and causes an injury or damage. I am wondering if you read the bill as written, if a property owner could be sued for these instances, even if we enact the language in the bill.
Ms. Porter:
The provisions of A.B. 390, section 1, subsection 2, “do not prohibit a governing body from:” and on page 2, lines 7 through 11:
Requiring, by ordinance, owners of property to be responsible for: (1) the repair and reconstruction of a sidewalk in the public right‑of‑way that abuts the property of the owner if the owner caused the need for such repair or reconstruction.
Section 1, subsection 2, paragraph (d), subparagraph (2) continues, “The general maintenance … including, … removal of snow … “ is the responsibility of the property owner. I am not an attorney and I do not know if that language handles the liability issue on those two items. If not, and it is general law, perhaps we need an amendment to incorporate the general law.
Scott Wasserman, Committee Counsel:
The only way it would be covered, under the statute and under the bill as written, is if those grounds were specifically included in the local ordinance that was adopted. If the local ordinance included that the property owners were liable for such conditions, then they would be liable; but if it was not included in the ordinance, I do not believe it would be the case. You would need a provision saying a person is liable for either failing to comply with the local ordinance, or the owner-occupier has created a dangerous condition, or has a special use that causes the injury or damages.
Chairman O’Connell:
This sounds like a friendly amendment. Assemblyman Parks, would you have any objection to an amendment?
Assemblyman Parks:
I presumed that was the way the bill was written. Yes, I see this as being a friendly amendment.
Chairman O'Connell:
I will close the hearing on A.B. 390 and open the hearing on A.B. 425.
ASSEMBLY BILL 425 (1st Reprint): Revises provisions regarding public works. (BDR 28-405)
Assemblyman Parks:
I am bringing forward A.B. 425, a fairly comprehensive bill that makes some revisions to NRS 338. This bill has the support of contractor and builder groups, as well as public agency and purchasing officials. We have several experts here to testify who have worked diligently in revising the language in NRS 338.
Mr. Olivas:
As mentioned earlier, I am chairman of the Nevada Public Purchasing Study Commission. Last session, Senators O’Connell and Tiffany helped us pass a bill to clean up NRS 332, which concerns local government purchasing. It was easier to process that bill than NRS 338, because NRS 338 is a very lengthy and complex statute. We began looking at NRS 338 more than 2 years ago. The entire NPPSC from northern and southern Nevada met, then we gathered with the Associated Builders and Contractors, and finally met with the Associated General Contractors to make sure we were all on the same page with what we were doing.
I will go through the bill section by section. Section 1 adds a new protest procedure similar to the section on State purchasing in NRS 333.370. It adds a protest process for our public works projects as well. Section 2 is basically a cleanup provision. We tried to consolidate a number of definitions used throughout NRS 338 into one section, so there would be a comprehensive list. Section 3 has the exemptions to NRS 338. We elaborated on the process used for emergency situations and this wording mirrors the language in NRS 332. It says if you have an emergency, it should be fixed, then reported back to the local government body. We thought the reporting mechanism was important.
Sections 4 through 12 are general cleanup of the employment and wage sections of NRS 338, the Office of Labor Commissioner sections. We worked with the labor commissioner on these to clarify the reporting of information between the public bodies of the Office of Labor Commissioner and contractors. It clarifies both the Office of Labor Commissioner and the public bodies can collect investigative costs from a contractor found in violation of the prevailing wage laws.
Section 13 is cleanup as well. This section defines the three ways local governments can award public works projects. The traditional method is to advertise, get the bids, award the bid, do the prequalification process, and the design-build process. Section 14 is a cleanup provision. Section 15 relates to prequalification. The way the law was written previously, the State had one more criterion than local governments. This bill came about before A.B. 295, which adds a laundry list of criteria. We added the fifth criterion for local governments to be consistent with the State.
Mr. Olivas:
Sections 16 and 17 are both cleanup sections. Sections 18 and 19 are duplicate sections, but section 18 has a sunset provision. This section is partially cleanup. It talks about the advertising process used for the prequalification of contractors, it better defines advertising requirements, and allows an authorized representative to award public works projects if so authorized by their public body. For instance, if the county commission authorized me to award certain contracts with certain criteria, I could award those, but it would be necessary to go back and tell them what I did. We have specific procedures set in place. Obviously, if there were a protest or any issue with the project, it would go before the board, so the due process is still there.
Section 20 is basically cleanup and says we cannot award contracts to contractors and subcontractors who are not properly licensed. Section 21 clarifies the requirements for “bidder’s preference” and “best bid.” The way the law is currently written, contractors have to submit a copy of the certificate issued to them by the State Contractors’ Board to be eligible for bidder’s preference. If they forget to submit the form, we have to reject the bid. We think it makes no sense from a public-policy perspective. In Clark County, we have rejected bids for a piece of paper. This change says you must be in possession of a valid certificate when you submit your bid. If they happen to forget to include the form, we could call them and ask them to fax it to us; if the certificate is valid, the bid is fine. This section alone will save millions of dollars, many protests, and we think it is a very important part of this bill.
Section 22 and 23 are both cleanup sections. Section 24 relates to the subcontractor listing requirements. Nevada Revised Statutes 338 says general contractors have to submit a list of the subcontractors they want to use with their bid. They have the 5 percent list and the three low bidders have to submit a 1 percent list within 2 hours after bid opening. In Clark County, we look at our watch and say it is 1:23 p.m.; you have to get the information to us by 3:23 p.m. We have added an optional provision to get the same information. It says the jurisdiction will provide a list of those portions of the work that represent 3 percent or more of the total project. We will provide the list in the bid document and the contractors will fill it out. That way we do not get conflicting information.
Typically what happens is we get a lot of protests because one contractor says you did not list someone for electrical and another contractor says you did not list someone for plumbing. It creates the possibility of a protest for every bid we open because you can always protest someone not listing someone you have listed. This fixes the problem and gives us an option. We think it will save money as well.
Mr. Olivas:
Sections 25 and 26 are duplicates. Section 25 has a sunset provision; these sections are the same as sections 18 and 19. Sections 18 and 19 relate to prequalification and advertising requirements. Sections 25 and 26 relate to the advertising requirements for the traditional bidding process. We made the same changes there. Section 27 is the same as section 20; it prohibits awards to contractors and subcontractors who are not properly licensed. Section 28 is the same as section 21; it relates to bidder’s preference and the best bid. It uses the same wording for the traditional bidding process. Section 21 was the prequalification process.
Sections 29 through 46 are all cleanup provisions. We tried to address the things that drove the costs of our projects from a process perspective. We wanted to talk to the industry to find out what made sense and how could it be improved for everyone. We think this is reflected in A.B. 425. We looked at all of the terminology used in NRS 338. When the term “local government” is used, it is used throughout; it is not awarding authority, awarding jurisdictions, or subdivisions of the State. The words local government are used consistently.
Senator Raggio:
Is there any inconsistency with A.B. 295, which also addresses the NRS 338 criteria? Are we doing something different in this bill?
Mr. Olivas:
We did not address the prequalification criteria in this bill, other than adding one additional criterion, in order to have the same number as the State.
Senator Raggio:
Assembly Bill 295 does change the whole list of criteria, but it deals with NRS 338. I think we need to know what we are doing if we are going to process both of these bills.
Chairman O’Connell:
Mr. Wasserman, could you verify it?
Mr. Wasserman:
The committee has had other bills dealing with some of the issues in these bills. Where they are just technical conflicts and they do not conflict substantively, we will ultimately codify all those changes at the end of session. If there are substantive conflicts, we will look at those as they are approved by the Legislature. If they are substantive conflicts, a notice would go out to whichever committee has the other bill still in committee, and we would ask you to review those provisions and make a policy decision. There are some amendments that will have substantive conflicts between the bills.
Senator Raggio:
That was the reason for my question. I think some of these are not technical, but are substantive conflicts.
Chairman O’Connell:
We might want to take a look at Senate Bill (S.B.) 491 and S.B. 19 to see if there were any conflicts. It did seem there were some things that were repetitive or addressed the same areas, but did not seem to be in conflict with each other.
SENATE BILL 491 (1st Reprint): Makes various changes regarding bidding on contracts for public works of this state. (BDR 28-487)
SENATE BILL 19 (1st Reprint): Makes various changes relating to advertising and awarding contracts for certain smaller public works projects and requires Department of Transportation to follow contracting procedures used by other state agencies. (BDR 28-409)
Senator Hardy:
I think the record ought to reflect the work Ted Olivas, Justine Chambers, and Jim Keenan did on this issue. They worked on this for 2 years and their work is a model for how this kind of thing ought to be done. I want to recognize them publicly for their work.
Chairman O'Connell:
From the committee’s perspective, we do want to applaud your efforts.
Senator Care:
I have a few questions. There are 5 business days to file a protest after the date the bids are opened. I am presuming anyone who submitted a bid is going to receive notice the bid has been awarded. Otherwise, how would you know your clock is running, that you have 5 days? What is the standard in determining a protest? You cannot use judicial intervention until the public body has made a determination on the protest. I am wondering if there is a period of limitations to be done within so many days after you have been turned down on your protest. Also, the surety would cover expenses incurred by the public body because of the unsuccessful protest. I am wondering if it would include any delays to the project. It does say “the state of action” in relation to the awarding of the contract, when there is a protest.
Mr. Olivas:
The bid process is a public process. The general contractors are typically sitting in the room, so everyone knows who is the low bidder. General contractors would ask questions about the subcontractor lists. It is an open meeting; it is a public record, and that is when the clock would start. If we were sued for a decision the contractor did not like, it would go before the board. The board would say either we agree with contractor A or contractor B. At that point, if the contractor felt there was some sort of legal recourse, he would sue us. This is how the process would work in terms of the bond or security. It is generically written, but it could include the cost of delays for the project.
James E. Keenan, Lobbyist, Nevada Public Purchasing Study Commission:
We have this provision in bid documents for a number of municipalities. For example, in Douglas County we have used this provision in our bid documents for several years. Basically, it starts at bid-opening time and the bidders have 5 days to register a protest, during which time we stop all action. The bid documents say the decision of the governing body, in this case, the Douglas County Board of Commissioners is final. It has stopped most frivolous protests. We have had two legitimate protests and they were resolved within 2 weeks. Even though our board of commissioners ruled in the governing body’s favor, it was not worth collecting any of our costs from the bond. We returned the bond. We have been doing this as a practical matter for about 3 years, and it has worked nicely.
Justine A. Chambers, Lobbyist, City of Carson City, and Nevada Public Purchasing Study Commission:
We support this bill as well.
Mr. Morse:
I signed in opposition to this bill, not so much because we are opposed to the concepts embodied in this bill, but as was pointed out by members of the committee, there are some substantive conflicts between this bill, A.B. 295, S.B. 19, and several other bills. We want to point out those conflicts to make sure the intent, the best of all of the bills, comes together in the final legislation. If you look at existing statutes, NRS 338.1377 allows us to have qualification or prequalification of bidders as an optional practice, as detailed in NRS 338.1383. If we do not want to go to prequalification, it allows us to use the normal method. Assembly Bill 425 eliminates NRS 338.1383.
Chairman O’Connell:
Please identify the specific areas you are referring to, since this is a large bill.
Mr. Morse:
Looking at the last page of the bill, the “Text of Repealed Section,” you will see that NRS 338.1383 has been repealed. This is the language that allows us an option not to prequalify on contracts. I do not think the intent was to take that away, but if you look at the language in this bill, it will operatively require us to always prequalify bidders on all of our public works jobs. This is our interpretation, having sought an opinion by our legal counsel. I know in working with Mr. Olivas, it was not the intent on A.B. 295. I want to make sure we do not inadvertently lose the ability in this bill.
Section 18 eliminates the current language dealing with public works projects between $25,000 and $100,000. It offers a streamlined process of dealing with those projects, but does not offer a clear alternative. An alternative is offered in S.B. 19, and we want to get the best of all of these bills as we go through them. I would like to echo the compliments made to the group of people who worked to clean up this legislation. They did a monumental job. I think in the end we will get some very good legislation out of this collectively, after it passes through the legislative gauntlet this year.
Chairman O’Connell:
Did you have the opportunity or could we invite you to take the opportunity to look at the other bills where there might be some conflicts? Could you work with the committee and bring back any of the information you find?
Mr. Morse:
We would be interested in looking at the other bills. There were so many bills this year dealing with NRS 338. We would certainly like to work with this committee and any others to make sure we get a solid piece of legislation.
Mr. Olivas:
I would love to be a party to those discussions because this has a huge impact on our operation. To address two things mentioned, on page 12, section 13, of the bill, NRS 338.1373 is the section that discusses the three ways bids can be done. If you look at the prequalification section, it says the bidder has to be qualified unless exempt from meeting such qualifications; so, it was an exemption from the qualification requirements per NRS 338.1383. We are very concerned with the wording in the repealed section on page 52 of the bill. It says:
If a local government does not adopt criteria for the qualification of bidders … the governing body may only accept a bid on a contract for a public work from a person who holds: 1. An unlimited contractor’s license … .
The first issue is if you add that on its own, it would say if you do not prequalify, you could only accept bids from unlicensed contractors. The second issue is if you are going to prequalify, then prequalify. There should be no exemptions for any contractor. You go through the process or you do not; it is a business decision. If this was intended to be an exemption, we think it needs to be taken out. If you are going to do prequalification, you have to be prequalified. That was the intent.
I understand the concept behind it; however, there may be some things to be clarified in the language to make sure the intent is very clear. It is a very complicated statute. We want to make sure it is very clear as to what we can and cannot do because this is expensive for the public, as well as for the contractor.
Chairman O'Connell:
Mr. Wasserman, when might you be available to work with these gentlemen?
Mr. Wasserman:
Perhaps we can meet Friday to discuss these issues. It is further complicated because there are several bills doing several things and we do not know which might be approved by both Houses. At least with these bills, if you want to make some policy choices as to whether you want to make them look like the bills you previously processed or not, it could be done in the work session.
Chairman O'Connell:
Can you think of any bills other than S.B. 491 and S.B. 19 that deal with the NRS 338 statute?
Mr. Morse:
Certainly A.B. 295, and there may be others to examine. I believe A.B. 393 is no longer a concern. Between now and Friday we will see if there are any others we can identify.
ASSEMBLY BILL 393 (1st Reprint): Revises provisions relating to public works projects. (BDR 28-996)
Senator Hardy:
I would like to point out S.B. 491 deals with State public works. The criterion has been different for State public works for a long time. It is not necessary for those to match unless the committee wants to make a decision to look at those bills. I certainly think A.B. 295 and the others need to be examined.
Ms. Chambers:
I want to clarify, Mr. Olivas and I wrote the language for S.B. 19 along with Mary Walker. The reason it is not in the cleanup bill is we did not know what would be passed. We also worked on A.B. 295 and A.B. 393.
Mr. Olivas:
The labor commissioner made some changes also.
Chairman O'Connell:
Mr. Johnson, would you be available to work with this group?
Mr. Johnson:
Yes.
Mr. Holloway:
I just wanted to say we are in favor of A.B. 425.
Chairman O’Connell:
I will close the hearing on A.B. 425 and open the hearing on A.B. 432.
ASSEMBLY BILL 432 (1st Reprint): Revises provisions concerning certain penalties against and withholdings of money from contractors and subcontractors on public works. (BDR 28-932)
Assemblyman David F. Brown, Assembly District No. 22:
The genesis of A.B. 432 is the prevailing wage provision found in NRS 338. I became aware of certain extreme penalties identified in NRS 338 as forfeitures on public works contracts for what I like to call “no harm, no foul, mere‑late‑filed certified payroll reports.”
On a public works project, you are required to pay the prevailing wage to each worker under NRS 338. You must also report accurate and timely information on a monthly basis. If you do not do a reporting, you might be fined anywhere from $20 to $50 per worker, per day.
I had some dealings with one particular general contractor who had a forfeiture, which is money withheld by the awarding or public body. It is not a penalty assessed by the labor commissioner, it is entirely separate. The general contractor had $23,400 withheld for forfeiture because a subcontractor lost track of an $8000 subcontract. The subcontractor was in and out of the project over a 2-week period, but straddled a 2-month time period and thus involved two certified payroll reports. One report was 69 days late; one was 90 days late. No one was underpaid, there was no inaccurate information or attempt to evade and indicate improper payment or misclassification; it was no harm, no foul. It was a $23,400 withholding on an $8000 subcontract.
There are instances of withholdings of $188,000, or $50,000, and these are merely late-filed, certified payroll reports. With A.B. 432, we have created three tiers, rather than two tiers. The first tier or violation is the contractor who does not pay enough to his employees. The penalty is still $20 to $50 per worker, per day, without a cap. We have more clearly identified the second category, which is willfully falsifying your monthly certified payroll report or providing incomplete information. There is some concern a contractor may have 20 employees on a project and include accurate information, but only on 10 employees. We included the word “incomplete” to cover that situation. Again, there is no cap.
We are creating a third category in A.B. 432 which is a no-harm, no-foul, late‑filing category with a cap imposed on the forfeiture. It maintains the same calculation of $20 to $50 per worker, per day, so it escalates very quickly. We do it so there is some steam to not being on top of the game; but we cap it at $1000 for the first failure on any public works project, and $5000 for any subsequent failure on the same project. This will prevent these runaway penalties where the penalty does not fit the crime.
Section 2, subsection 5, of A.B. 432, deals with a change in date. It lengthens the period for submitting the payroll report from the tenth to the fifteenth day of the month and is consistent with the other bills. Section 6 takes into consideration situations where a subcontractor has given the payroll report to the general contractor and the general contractor submitted a late payroll report and tried to withhold from the subcontractor. In section 6, if the subcontractor provides the payroll report to the general contractor by day 10, and the general contractor submits it belatedly, the general contractor cannot withhold from the subcontractor.
We also indicate nothing prohibits the subcontractor from submitting the report directly to the public or awarding body. In some instances, the awarding bodies have not wanted to receive their payrolls from 25 different contractors including the subcontractors; they want to receive one package from the general contractor. If, for instance, a subcontractor does not get the report to the general contractor by the tenth day, and wants to make sure he or she is covered, the subcontractor can take it directly to the awarding body. We want to give the subcontractor the right by setting it forth clearly in the contract. We did not include an effective date, because it is important to have those caps. There are cases right now that need caps and we would like to include an amendment with an effective date on passage.
Senator Care:
In section 1, paragraphs (a) and (b), I will refer to paragraph (a) as the inadvertent part you discussed earlier; paragraph (b), where it is a willful violation, and then in section 2, it says whether it is (a) or (b), here are your fines, but you cannot be for both. To me, that is equating the forfeit for a willful act much the same as the inadvertent or neglectful act. Could you elaborate on this issue?
Assemblyman Brown:
The discussion in the Assembly was, “Do not underpay.” If you underpay, you will be penalized the top dollar. The discussion was what if you maybe unintentionally include the wrong information; we want to distinguish between schemes to evade paying the prevailing wage. This can manifest itself either by just not paying the right amount, whether it is reported accurately and you get kickbacks on the backside, or intentionally providing false information. There needs to be a distinction between the inadvertent inclusion of inaccurate information versus willful information.
That was the motion in the Assembly. The top-tier offense was not paying enough because you could transpose two numbers. For example, $26.10 is the prevailing wage and I transpose the “0” and the “1” and underpay 9 cents an hour. Should I get hit with an $80,000 forfeiture for total failure to pay? There may be further discussion on this issue.
Mr. Madole:
We are here to support A.B. 432. I agree with Assemblyman Brown. In our amendment, we were concerned we not support anyone who has any sort of problem with payment of money on public works projects. For example, a 10‑cent per hour error or oversight on payment might be a $17.60 error in a typical month. This might occur for 30 or 40 days before the report is submitted and the error detected. At that point, you would be fined a minimum of $1100 for a $17.60 mistake.
On a public works project, someone with 50 or 60 people on his payroll could have a $200 or $300 mistake which could bring fines of $10,000, $20,000, $50,000, or $60,000. We are not after that, but it raises a second concern. Prior to the processing of this bill, the numbers have been so large some public works agencies may have an incentive to fine or cause forfeitures to come back to them to save money on projects. The amendment the labor commissioner and the AGC discussed would find some way for the forfeitures to do good for people in the State, but perhaps not necessarily default to the agency doing the job. One option was to have 25 percent of the forfeitures go to a construction education account and the balance to an account established by the labor commissioner for restitution of wages for individuals who have not been paid. I know there have been companies who went under with 50 to 100 employees who did not receive paychecks. This way there is a combination of public good. You are still penalizing the contractor for the mistake, but it does not necessarily benefit the agency for whom they work.
We conceptually agreed to an amendment and I had something prepared to hand out, but it has a mistake on it and I have not distributed it.
Mr. Johnson:
I am here to testify in support of A.B. 432. It is much needed legislation, particularly the different tiers, for contractors who file their certified payroll reports in an untimely manner. I have had matters come before me where the forfeiture penalties have been as high as $188,000 for a single contractor whose payroll reports were not on time. There is an interest on behalf of the public agency to ensure timely receipt of those certified reports, but I think we need to make sure the infraction, or punishment, is commensurate with the infraction. This bill attempts to do this and I fully support the concept.
Over the years, a practice emerged where subcontractors would turn in the report to their contractors with the expectation it would be turned in to the public agency, but it has not happened. The subcontractors do everything right, in their mind anyway, and rely on the prime contractor to submit the reports; then, they are penalized. I do not think it is an appropriate regulatory scheme to penalize someone under those circumstances. The bill attempts to clarify this issue. It is much needed regulatory relief for contractors engaged on public works projects.
I want to speak further with Assemblyman Brown about the need to distinguish, in certain portions of the bill, the difference between a contractor and a subcontractor. This is necessary because, over the last 3 years as labor commissioner trying to enforce these laws, I have become more of a hairsplitter than previously in my life. It might be wise to go back and look, just to ensure the appropriate intent is there. Usually the terms contractor and subcontractor are used interchangeably. This is one of the areas where I think it might be helpful to distinguish between a contractor and a subcontractor.
Senator Care:
Effective upon passage, let us say 15 days from now, would it apply to those cases where the violation is discovered before passage, but no forfeiture has been affected?
Mr. Johnson:
When the infraction occurred versus when it was detected may be a legal issue. We would probably look at when the infraction occurred, whether it was before or after the passage of the bill.
Mr. Madole:
If we are going to amend this, I would like to give the labor commissioner some discretion. Sometimes it is a very minor infraction, and the law seems to be somewhat inflexible. I would not want to keep this bill from passing, but I would like to give the labor commissioner the opportunity to see if there might be a new payroll person, or an extenuating set of circumstances. The way I interpret the law right now, he would not be able to make some sort of an accommodation for those situations.
Chairman O’Connell:
We normally have a work session on Wednesday. Would it be possible to have you meet and discuss this prior to next Wednesday? Could we have some kind of direction from you by that time?
Mr. Madole:
We would appreciate the opportunity.
Chairman O'Connell:
I will close the hearing on A.B. 432 and open the hearing on A.B. 393.
ASSEMBLY BILL 393 (1st Reprint): Revises provisions relating to public works projects. (BDR 28-996)
Assemblyman David E. Goldwater, Assembly District No. 10:
The AGC brought a problem to my attention that existed on some of the larger construction sites and construction jobs. Evidently there were some problems with the amount of retainage contractors receive only after the job is complete. Contractors have a large amount of money withheld because they are required to purchase goods and materials to complete the job. Having those kinds of dollars withheld essentially turned them into finance companies.
We moved ahead with a bill to reduce the requirement for retainage. It brought up a host of issues including the ability to negotiate with these entities, and the ability for labor groups and labor working on these jobs to be assured payment of wages and benefits. There was a hard-press negotiation with some good and bad things taken out of the original bill. We were left with A.B. 393. One of the things A.B. 393 does is reduce the amount of retainage on a job. This is unless the entity says it is not moving along on time and stops unbalanced bidding the front-loading of contracts.
Chairman O’Connell:
Let me make sure I understand an unbalanced bid. You might have a bid on a project and you will bid high on one and low on the other, because you know the difference between the two will be made up, and it will be a wash. Is that the essence of what it is?
Assemblyman Goldwater:
Yes, it is defined on page 4 of A.B. 393. Line 29 says: “’Unbalanced bid’ means a bid that is based on prices which are significantly less than cost for some bid items and significantly more than cost for others.”
Chairman O’Connell:
Is there any criteria set down in the law that identifies whether the bid is unbalanced?
Assemblyman Goldwater:
I am guessing there is.
Chairman O’Connell:
Can we work with some of the contractors to put something in the bill? Would that be amenable to you? I thought it might be helpful if we had some criteria to judge whether it is balanced or unbalanced.
Assemblyman Goldwater:
That would be fine. I learn more about the public works process every day.
Mr. Holloway:
We have a host of people to testify on A.B. 393. Let me give you some background on the bill. It is a compromise bill, a compromise between labor and management of the construction industry and the public works agencies who are affected by NRS 338.
I have submitted my testimony for the record (Exhibit J) and “Assembly Bill No. 393, Summary of Revisions to Statute on Public Works Retainage (NRS 338.515),” (Exhibit K). I would be glad to go through it with you.
Chairman O’Connell:
We do not need to go through it section by section, because we can read it. We just need a general feel for the reason the bill came about and what can be solved through the bill.
Wesley Smith, Operations Manager, New-Com Incorporated, doing business as MMC, Incorporated:
We are a general contractor located in North Las Vegas. I appreciate the opportunity to speak in favor of this bill. The majority of our operations involve construction of public works projects in southern Nevada, including water and wastewater facilities, airport construction, highways, and bridges. During the past few years, there has been a trend in the public works sector to withhold progress payments, based on a project’s specific criteria. These withholdings are established as a condition of the contract. It has created an unneeded financial burden on those constructing the work.
All of our public works projects require performance bonds, payment bonds, and are subject to retention as set forth in the statutes. In addition, we must now complete contracts laden with excessive retentions and withholdings. These contracts can contain start-up withholdings, Critical Path Method (CPM) schedule withholdings, submittal withholdings, withholdings for operation and maintenance manuals, performance test withholdings, restrictions on mobilization payments, and withholdings reserved until the contractor has demobilized.
My company is hardest hit by the construction of water and wastewater treatment plants, and water transmission facilities. Certain agencies restrict payments for process equipment, such as large pumps, valves, and blowers, paying up to 80 percent at delivery, with the remaining 20 percent paid at start‑up. This, on some major public works projects could take many months after delivery. We have found it virtually impossible to negotiate these terms with equipment manufacturers; therefore, we must finance the unpaid balance for extended periods of time.
As an example, a typical project for us might total $20 million, with $5 million in process equipment subject to these payment restrictions. The halfway point of this $10 million contract is in place, and all of the process equipment has been delivered to the project, but $1 million is held as standard retention. The $1 million is held on payment for the equipment, and another 1.5 percent, or $300,000, is held for bid items. The agency calls it demobilization. It requires us, at the time of the bid, to have that amount set back for the item. The net result is a withholding of $2.3 million on a $10 million contract, or 23 percent.
These withholdings affect our cash flow and ability to pay our suppliers and subcontractors. It impacts our ability to make weekly payroll and cover overhead expenses. Our opportunity to acquire additional work is also impacted, as the bonding companies look at our cash flow when they evaluate the issuance of performance bonds and payment bonds.
The construction industry is impacted by excessive retentions. The current structure is placing an unnecessary financial burden on the general contractor. I am here today to strongly support levying withholdings on public works projects.
Chairman O’Connell:
You say you are having this problem with the water district. Is this on the “second straw?”
Mr. Smith:
Yes, the project is related to it. We typically see this working for the Southern Nevada Water Authority and the former Clark County Sanitation District, now the Clark County Water Reclamation District. At one point this year, we had almost $80 million in contracted work with these two agencies. These things accumulate and when you have that amount of work with specifications restricting payments, it becomes burdensome.
Chairman O’Connell:
Could you explain why they are withholding payment?
Mr. Smith:
I think agencies try to create controls within their contracts to oversee the contractor. These provisions are put in place as protection in a worst-case scenario. They fear certain things might be done and they think the only hammer they have is to hold the money. In the past, there have been contractors who did not supply operations and maintenance manuals in a timely manner, and there may have been other similar issues. Someone has a real good idea and says let us hold 1.5 percent at the end of the project for demobilization. These things just accumulate. We are at the point where we have belts, suspenders, staples, and everything else. It has become a huge burden for us.
Chairman O’Connell:
You are telling us it has nothing to do with the work you have done, because the work has been satisfied with inspections.
Mr. Smith:
Definitely. This is a contract condition which says you buy a $1 million pump, but we will only pay you $800,000 of the amount until the pump has been installed and started up. They also hold money. We have to set aside money for installation and they hold the money in reserve until the pump is installed. We cannot negotiate terms with manufacturers of equipment such as this. On a big public works project, for example, a large pump station for the water authority might be set into place, but may take many months to become operable. The way the contract is set up, 20 percent of the value of the piece of equipment is withheld.
Senator Raggio:
What if the pump does not work then?
Mr. Smith:
There are provisions such as forced start-up and testing. On a $20 million project, $1 million would be held in reserve for problems with the pump.
Senator Raggio:
I am asking because it is not much of an answer to say you are going after a bond, because going after a bond is costly, time-consuming, and not a great remedy.
Mr. Smith:
I guess our position is we do have retention in place. The statutes allow agencies to withhold retention monies and the money is withheld. The excessive retentions, these hidden withholdings, have become real burdensome.
Senator Raggio:
You have worked with the public sector agencies on this. Do they all feel this is a viable answer?
Mr. Holloway:
We have reached a compromise with the public works agencies and this bill reflects the compromise.
Senator Raggio:
I am asking because we have had many cases of projects in this State, for instance the Nevada Veterans’ Home, and the University of Nevada, Las Vegas Lied Library, projects that go on and on. I am not sure of the amount of retention in those cases, but there are serious problems that result and we are litigating all the time. I am not sure we are doing something right here, by limiting the amount of retainage.
Mr. Holloway:
You asked two questions. First, over the last 5 to 10 years, there have been several thousand public works projects successfully completed in this State with few or no problems. Of the several thousand public works projects, three or four came to public attention because of the problems. This Legislative Building, the Lied Library, the justice facility in Clark County, and the veterans’ home in Henderson are four problems. There have not been a significant number of other public works projects over the last 10 years which have encountered those kinds of problems. To answer your question, I do not think additional retention or withholding would have helped on any of those projects. I would be glad to sit down and give you the contractor’s point of view on what happened in each of those cases.
In this bill, retention on an NDOT project is limited to $50,000. That is the cap and since NDOT has not had these kinds of problems, retention is not the big factor. In this case, under the compromise, we have said retention will be 5 percent for the first 50 percent of the contract. If progress is satisfactory after 50 percent of the job is done, and understand they are not paid unless the agency determines progress is satisfactory, they can reduce the retention. If it is not satisfactory, under these revisions they can go back and collect 10 percent retention for the entire project. They have an option, a way of going after a bad contractor for additional retention, but they are not keeping the additional retention from the good contractor, if progress is satisfactory.
Angela Ziel, Lobbyist, Associated General Contractors:
I work for Kaercher Insurance Agency, Incorporated, and am also on the board of directors of the Surety Association of America, Nevada Chapter. We support A.B. 393. I have submitted a copy of my testimony for the record (Exhibit L).
Mr. Ashleman:
I want to comment on the unbalanced bid question. There are ways to determine an unbalanced bid. First, look at what the other contractors have bid. Second, there is a schedule of values in this bill indicating expected expenses of various equipment, operative costs, and other costs. Case law in the United States, the decided cases, gives us guidance as to what an unbalanced bid is and is not, so there are some guidelines. This does not preclude us talking with the industry about working out some further language.
I want to emphasize an unbalanced bill can really unbalance your retention and unbalance your control of the project. If a business has attributed a lot of money to a relatively inexpensive item, and the contract is awarded to them, you may have overpaid early in the contract. Then there would be problems with retention and ultimate recovery of damages.
It is integral to the local governments’ acceptance of A.B. 393, which does cut into our retention abilities, that we have the language on the unbalanced bid. We are concerned about those in the industry who might address you regarding removal of that language. It would be a big concern to us. Part of what we got for giving up other things was to put this unbalanced language in the bill. Currently in the law, we can deal with unbalanced bids; but currently in the law, we are not going to be restricting our retention to the extent we are now. If we have the one change, we would strongly urge you to work with us to help keep the other change.
Chairman O’Connell:
I was wondering how subjective it was for whoever makes the determination. I want to know nonsubjective information and to know you have clear-cut information to look at when you are making the determination.
Mr. Ashleman:
It does require a judgment call. If the issue is avoided because there are ordinarily a number of bids with a number of estimations, and there is a schedule of values in the first place, it is by no means unbridled as a judgment call. There is quite a bit of limitation. It is a practical matter. You are going to say nobody can get a generator for $14; whether it was $300,000 or $320,000, it is certainly a judgment call.
The language we use says “significantly out-of-line.” It does not say it is a little bit unbalanced; it says significantly out-of-line, both as to the cost of one and the limits of the other. You must have both of those elements. There are decided cases that outline this. Between what you would look at in the other bids, what you would look at in the schedule of values, and the case law we have established, there are a lot of limitations on the judgment. I cannot make it any tighter. It is the best I can do.
Santana Garcia, Lobbyist, Southern Nevada Water Authority:
Mr. Jeffrey will answer some of the issues raised about Southern Nevada Water Authority (SNWA). I will discuss a friendly amendment. We are in support of A.B. 393 with a proposed, friendly technical amendment entitled, “AB 393 Proposed Amendment, 4/28/03” (Exhibit M).
The SNWA worked alongside other local government agencies as well as the ABC to hammer out a compromise on the bill in the Assembly. However, when the amendment was drafted, words were changed which brought some concern to the entities involved in the compromise. We are asking the committee to simply amend section 1, subsection 2. I am not a lawyer, but I believe the change in the language is the more proper technical language needed in this section. Other than the amendment, we are in support of A.B. 393.
Mr. Holloway:
The proponents of this bill have no problem whatsoever with the amendment.
Mr. Jeffrey:
I represent SNWA and the Southern Nevada Builders and Construction Trades Council (SNBCTC) on this particular legislation. When the bill was initially introduced, it was quite different than it is today. Both SNWA and SNBCTC opposed the bill. There was not enough money left in the retainage to handle disputed wages and fringe benefits. Local entities opposed the bill because they did not think they would have proper control over the projects.
Mark Jensen, of SNWA, worked with local entities, the cities of Henderson and North Las Vegas, and Clark County General Services, to negotiate a settlement on this issue. An important part of the negotiations was a good percentage of the retainage is paid before the second half of the job is reached, and if everything goes well, there is no more retainage. Local entities were concerned jobs could be front-end loaded. The unbalanced-bidding language was an important part of the negotiations and an agreement could not have been reached without it. I would ask you be careful in doing anything with the language that might cause the local entities to lose control of projects.
Nevada Department of Transportation is different in bidding their construction projects. It is basically raw material with NDOT; it is oil, cement, and they make a lot of their own material on a project. They do not have the complicated kinds of construction, nor the expensive permanent equipment to be installed that a water project or a sanitation project would have. In fact, NDOT is not required to use the unbalanced provision in the bill. It is a permissive thing on the part of the awarding agency. With local government, the bidding process for heavy construction is quite a bit different than NDOT. They have several exemptions in the law and if they want to be exempt from the provision, it would not be a problem for local governments.
Mr. Madole:
I do not disagree with any of the things said earlier about getting payments to contractors. The unbalanced-bid language in the bill is much more complex than anyone has noted. The language says if someone has an unbalanced bid in the 3 previous years, there is cause to get the person’s bid thrown out. This is a prescription for disaster as far as public works contracts go. Someone will say, “Hey, this guy had an unbalanced bid 2 years ago,” and then there will be a big fight on every job.
The amendment would delete all the language relating to unbalanced bids. This subject can be addressed on an administrative basis. The subject of unbalanced bids has been dealt with by NDOT through their specifications. When we put these sorts of things in a law, we encumber the process and it becomes very inflexible. To say a bid would be rejected, because of anything that happened in the 3 prior years, could be a disaster. I ask the committee to support the bill, but as I recall, this language was added as an amendment and I think it is not really well thought out.
Christopher Beck, Project Manager, Frehner Construction Company, Incorporated:
I would like to reemphasize the fact that unbalanced bidding is a very complex issue, and currently there is no clear definition of unbalanced bids. Existing definitions are too subjective and need review. The Nevada Department of Transportation has been wrestling with this issue for over 10 years. Within the last 2 years, NDOT has set up a bid-results assessment committee, which evaluates each of the bids on its own merit, and helps ensure unbalanced bidding does not occur.
We agree unbalanced-bidding results could be determined by each of the individual agencies. If the bidding agencies set up a process for an individual review, with specific guidelines, it would be less subjective. The 3-year limit would open up each and every contract that challenges, based on perceived unbalancing, without the benefit of the fine guidelines or processes. The bill is very vague in its existing language. It could cause major problems for any and all contractors bidding on public works projects.
Beryln Miller, Lobbyist, Nevada Contractors Association:
We are here in support of A.B. 393. As indicated by Mr. Smith, having to finance some of the large retentions on public works projects means the financing cost is put into the bid and passed on to the taxpayers. I would agree with the amendment regarding the prior 3 years on bid items; there is no reason to go back for 3 years. I was in the construction business for 40 years. There were cases where you knew a situation like that had occurred and there would be a tendency to front-end load a little just to try to cover your costs. If some contractor has done it in the past, I do not think it should qualify or disqualify him.
Senator Care:
Currently, for factors to be considered when a bid may be rejected, the language says, “It may be rejected; it is not mandatory.” The law lists four factors and the fourth one, “The public interest would be served by such a rejection,” seems to be fairly wide open. I am not sure what the standard would be, but your contention is it would be an automatic if someone had done this in the past 3 years. The bid would be rejected?
Mr. Madole:
The second bidder would allege that in almost every case.
Senator Care:
Apparently this is a frequent practice from the way Mr. Madole testified. The language could say, “Once in the last 1 year.”
Mr. Madole:
To establish something based on precedence would be very complex and raise a lot of issues. Each agency should be allowed to address this. If something is put in the law that gives an opportunity to allege someone did something in the past, jobs will be delayed. There will be fights over every job and I do not think the public’s best interest would be served.
Mark Elicegui, Chief Construction Engineer, Nevada Department of Transportation:
I am chairman of the NDOT bid-results assessment committee. I want to speak to the portion of the bill I believe would impact NDOT. Section 2 of A.B. 393, and the friendly amendment SNWA agrees with, is supported by NDOT. To speak to the other issues regarding unbalanced bids, as I read the current legislation, NDOT would be exempt from the sections that deal with the unbalanced bids; therefore, I do not see any impact on NDOT.
I would like to reaffirm the unbalanced-bidding issue is a very complex issue. There are varying definitions of what constitutes a mathematically unbalanced‑bid item. The cost of the bid may not represent what it actually costs to procure, whether it is a piece of equipment or providing a product. There is also a definition of a “materially unbalanced bid,” where your final cost for the project might exceed the initial contract award, due to a quantity overrun or underrun. There have been instances in the past where contractors try to take advantage of quantity errors. We formed a committee to evaluate these issues on a case‑by‑case basis and it requires quite a bit of time and commitment.
Senator Tiffany:
Mr. Madole said he thought every agency could handle its definition of balanced and unbalanced. I would like to hear your opinion.
Mr. Elicegui:
It sounds like there are some different equipment and procurement issues in southern Nevada versus NDOT projects. Our unbalanced bidding generally centers on quantity variations. If we do not get our estimate right on a 20-mile stretch of roadway on a particular bid item, the quantity can vary quite a bit. If a contractor has done his homework and found an error, he may try and to use it to his advantage. It is a national issue for highway agencies across the nation. Our current specifications reflect some definitions used by the American Association of State Highway and Transportation Officials. It would require some time for each entity to address this based on its own specific needs. Our committee is comprised of three people. We generally utilize a lot of technical support when there is an extremely close issue. It will require a lot of time for every single agency to do this. I question whether a broad definition can be written to address every single need.
Ms. Chambers:
We agree with the compromise. We have found this legislation to be enabling. The retention does not have to be reduced to zero at 50 percent of the job; you can hold 5 percent for the entire job. Money can be held for the labor commissioner. We agree with the amendment.
Mr. Ashleman:
I agree with Mr. Madole on the issue of disqualification. I do not think you need to have disqualification for an unbalanced bid. As far as retaining the unbalanced-bid language for approving a contract or not, it is very significant to us to retain it.
Chairman O’Connell:
I will close the hearing on A.B. 393 and open the work session on A.B. 3.
ASSEMBLY BILL 3 (1st Reprint): Provides for paid leave of absence of certain duration for certain public officers and employees who donate bone marrow or certain organs. (BDR 23-147)
Michael Stewart, Committee Policy Analyst:
There are no amendments offered for this bill.
Chairman O'Connell:
My concern about this bill is it would impact the State. If someone does not work for 30 days, and if there is any liability from the fact that they made a donation, this is a concern. It has to have a cost to it, but I was told it did not go to the Assembly Committee on Ways and Means.
SENATOR TOWNSEND MOVED TO INDEFINITELY POSTPONE A.B. 3.
SENATOR TIFFANY SECONDED THE MOTION.
THE MOTION CARRIED. (SENATORS CARE AND TITUS VOTED NO.)
*****
Chairman O’Connell:
I will open the work session on A.B. 56.
ASSEMBLY BILL 56 (1st Reprint): Amends provisions of Charter of City of Sparks governing boundaries of wards and voting powers of Mayor. (BDR S-211)
Mr. Stewart:
There were no amendments offered for this bill.
SENATOR TOWNSEND MOVED TO DO PASS A.B. 56.
SENATOR TIFFANY SECONDED THE VOTE.
THE MOTION CARRIED UNANIMOUSLY.
*****
Chairman O’Connell:
I will open the work session on A.B. 57.
ASSEMBLY BILL 57 (1st Reprint): Requires State Public Works Board to adopt certain seismic standards and requires certain governing bodies to amend their building codes to include certain seismic standards. (BDR 28-206)
Chairman O’Connell:
I understand Irene Porter sent an amendment for this bill but I did not receive it. Ms. Porter, tell us what you would suggest for this bill.
Ms. Porter:
At the time Assemblyman Bernard (Bernie) Anderson, Assembly District No. 31, testified on the bill, we were discussing two separate things. First is the seismic standard in the building codes that needs to be adopted by July 1, 2003, under the bill. Subsequent to the hearing, I found every jurisdiction in southern Nevada will have adopted the new codes by July 2003. I have no information on northern Nevada, but the whole code would not have to be adopted, they could just do the earthquake standards.
The second issue is the standards. Assemblyman Anderson and I were discussing the standards not completed yet. When the amendments were done in the Assembly, the standard should have been separated out and the date should perhaps have been July 1, 2004. They have to be completed before the local governments can do the hearings and adopt them. There is absolutely no way we as an industry nor any local government can comply to have the standards on liquefaction and potential surface ruptures completed and adopted by July 1, 2003.
The proposed amendment was sent to Assemblyman Anderson with a copy to you, Chairman O’Connell. We will get another copy for the committee. The problem is we need to be able to separate the two. The codes would be adopted July 1, 2003, the standards for liquefaction and potential surface ruptures would be adopted by July 1, 2004.
SENATOR TOWNSEND MOVED TO AMEND AND DO PASS A.B. 57 WITH THE SEPARATION OF DATES.
SENATOR TIFFANY SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
*****
Chairman O'Connell:
I will open the hearing on A.B. 67.
ASSEMBLY BILL 67 (1st Reprint): Amends Charter of City of Henderson to revise positions of city employment excluded from system of civil service. (BDR S-457)
Mr. Stewart:
No amendments were offered on this bill.
SENATOR TOWNSEND MOVED TO DO PASS A.B. 67.
SENATOR CARE SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
*****
Chairman O'Connell:
I will open the hearing on A.B. 69.
ASSEMBLY BILL 69: Expands exemption from requirement that State Public Works Board furnish engineering and architectural services for buildings constructed on state property or with legislative appropriation to certain improvements made by Division of Wildlife of the State Department of Conservation and Natural Resources. (BDR 28-521)
SENATOR RAGGIO MOVED TO DO PASS A.B. 69.
SENATOR TOWNSEND SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
*****
Chairman O'Connell:
I will open the hearing on A.B. 84.
ASSEMBLY BILL 84 (1st Reprint): Revises provisions concerning certain town advisory boards. (BDR 21-119)
Mr. Stewart:
There were two amendments offered for this bill (Exhibit N). The first amendment is proposed by Clark County, changing the term of office from 4 to 2 years for members of town advisory boards, and removing language in the bill that would have prohibited consecutive terms of office.
The committee directed the bill sponsor to discuss the amendments with the chairman of the Assembly Committee on Government Affairs. Support was expressed for the first amendment, but the chairman wanted to retain the rotating chairs option. Also, an additional amendment was supplied to clarify that members of town boards who are appointed must serve at the pleasure of the appointing authority.
Senator Raggio:
I do not see why the chairs are rotated. I think several testifiers made a compelling case that expertise and leadership are necessary.
Senator Care:
Did the testimony say if you served 2 years, you could still be on the board, even though you could not be the chair? The expertise would still be there.
Senator Raggio:
I think the people serving in those positions should be allowed to keep the chairs. They should not be compelled to rotate the position.
SENATOR RAGGIO MOVED TO AMEND AND DO PASS A.B. 84 TO CHANGE THE TERM OF OFFICE, DO AWAY WITH THE COMPULSORY ROTATING CHAIR, AND ALLOW MEMBERS SERVE AT THE PLEASURE OF THE APPOINTING AUTHORITY.
SENATOR TOWNSEND SECONDED THE MOTION.
MOTION CARRIED. (SENATORS HARDY, TITUS, AND TIFFANY VOTED NO.)
*****
Chairman O'Connell:
I will open the work session on A.B. 87.
ASSEMBLY BILL 87 (1st Reprint): Makes various changes concerning notarial officers. (BDR 19-230)
Mr. Stewart:
There were no amendments offered on this bill.
SENATOR TIFFANY MOVED TO DO PASS A.B. 87.
SENATOR TOWNSEND SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
*****
Chairman O'Connell:
I will open the work session on A.B. 147.
ASSEMBLY BILL 147: Revises provisions relating to purchasing by local governments. (BDR 27-799)
Mr. Stewart:
This bill has to do with the purchase of emergency safety equipment and some exemptions from the competitive-bidding process. There were no amendments offered.
SENATOR HARDY MOVED TO DO PASS A.B. 147.
SENATOR TOWNSEND SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
*****
Chairman O'Connell:
I will open the work session on A.B. 151.
ASSEMBLY BILL 151 (1st Reprint): Authorizes public guardian to appoint deputies and revises provisions relating to term of office of appointed public guardian. (BDR 20-580)
Mr. Stewart:
There was an amendment proposed by Washoe County clarifying the duties of deputies appointed by the public guardian. It specifies the board of county commissioners authorizes the making of such appointments. During testimony, a concern was raised regarding the ability of appointed deputies to determine policy for the public guardian’s office or to hire and terminate employees. This proposed amendment would limit the ability of appointed deputies to set office policy and hire and terminate employees.
SENATOR RAGGIO MOVED TO AMEND AND DO PASS A.B. 151.
SENATOR TOWNSEND SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
*****
Chairman O'Connell:
I will open the work session on A.B. 216.
ASSEMBLY BILL 216: Revises manner in which certain claims against state are audited. (BDR 31-491)
Mr. Stewart:
There were no amendments offered.
SENATOR TOWNSEND MOVED TO DO PASS A.B. 216.
SENATOR TIFFANY SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
*****
Chairman O'Connell:
I will open the work session on A.B. 217.
ASSEMBLY BILL 217 (1st Reprint): Makes various changes regarding State Personnel System. (BDR 23-495)
Mr. Stewart:
There is a proposed amendment and a memorandum from the State Controller Kathy Augustine. This information is explained in an information sheet (Exhibit O). A primary point of the bill was it allowed public employees to utilize their annual leave in case of an overpayment situation.
SENATOR RAGGIO MOVED TO AMEND AND DO PASS A.B. 217.
SENATOR TOWNSEND SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
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Chairman O'Connell:
I will open the work session on A.B. 224.
ASSEMBLY BILL 224: Revises provisions relating to Nevada Arts Council. (BDR 18‑531)
SENATOR TOWNSEND MOVED TO DO PASS A.B. 224.
SENATOR TIFFANY SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
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Chairman O'Connell:
I will open the work session on A.B. 270.
ASSEMBLY BILL 270: Revises provisions relating to community redevelopment. (BDR 22-384)
SENATOR TIFFANY MOVED TO DO PASS A.B. 270.
SENATOR TOWNSEND SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
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Chairman O'Connell:
I will open the work session on A.B. 318.
ASSEMBLY BILL 318: Directs installation of historical marker at gravesite of former Nevada Governor, Emmet D. Boyle. (BDR S-872)
SENATOR RAGGIO MOVED TO DO PASS A.B. 318.
SENATOR TOWNSEND SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
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Chairman O’Connell:
I will open the hearing on A.B. 328.
ASSEMBLY BILL 328: Requires Secretary of State to submit advisory question to voters concerning regulation of sale and use of fireworks in all counties of State of Nevada. (BDR S-787)
Chairman O’Connell:
If I am not mistaken, counties do have control of the licensing and an ordinance that controls the use of fireworks, at least in Clark County.
Mr. Wasserman:
Nevada Revised Statutes 244.367 provides that the board of county commissioners shall have power and jurisdiction in their counties to pass ordinances prohibiting, restricting, suppressing or otherwise the sale, use, storage, and possession of fireworks.
Dan Musgrove, Lobbyist, Clark County:
Yes, we do, but the testimony indicated they are looking for Statewide consistency.
SENATOR TOWNSEND MOVED TO INDEFINITELY POSTPONE A.B. 328.
SENATOR HARDY SECONDED THE MOTION.
THE MOTION CARRIED. (SENATORS TITUS AND CARE VOTED NO.)
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Chairman O'Connell:
I will open the work session on A.B. 427.
ASSEMBLY BILL 427 (1st Reprint): Makes various changes with respect to requirements relating to land use that may be imposed by governing body. (BDR 22‑1050)
Mr. Stewart:
This bill limits the conditions imposed on parcel maps for off-site access, street alignment, surfacing and width, water quality, water supply, and sewer service, to those that are necessary and consistent with nearby existing land uses and where the anticipated land uses are based upon adopted ordinances and plans.
Senator Townsend:
Was this about bike trails or paths in Carson City or Douglas Counties?
Senator Care:
I thought the testimony informed the statute was to be consistent with a U.S. Supreme Court case Dolan v. City of Tigard, 512 U.S. 374 (1994). I do not know how we could say it would be effective for one part of the State, but not the other, if that testimony is accurate.
Madelyn Shipman, Lobbyist, Washoe County:
The original bill was taken out and a new bill written. The current bill does not necessarily deal with the Dolan case. It recognizes a building permit is a ministerial act. In the absence of a requirement for prior discretionary approval, such as a special-use permit, when someone applies for a building permit, they cannot have exactions of real property imposed upon their exceptions. That tends to be under the control of the local governments because normally ordinances will cover it and the exceptions are if you have a special-use permit, for instance, as in the Dolan case. The representation was not quite right. We talked about the Dolan case and over-exactions. The Dolan case says there has to be “rough proportionality” and access when you extract real property as a condition for a permit. He felt he had been over-exacted when he came in for his building permit.
The bill, as it is currently written, really does not address the Dolan case at all. The Dolan portion would come in section 1, subsection 1, which says you can ensure all conditions are complied with prior to the issuance of the building permit. It would have been at the discretionary-permit stage that Dolan actually would come into effect, where the exactions would have to be roughly proportional to whatever the imposition of the particular development had on a community.
The bill as written really is the 1999 Wal-Mart Stores, Incorporated, case in Clark County, where U.S. District Judge Philip Pro ruled a building permit is ministerial and if all of the conditions have been met prior to the application for permit, the permit must be issued and cannot be held up.
Mr. Wasserman:
The bill was originally drafted to address specific requirements. They were saying if you are going to take a property interest from someone as a condition for a subdivision or property rights, there has to be an “essential nexus” between the land-use regulation and the governmental purpose. If you are saying you have to devote an area on an easement for the public to go through, it has to match the governmental purpose you are requiring for the easement. Dolan said there has to be a rough proportionality between those two so you are not overstepping what you are requiring of the property owner, the property interest you are requiring them give up.
The bill, as now drafted, is limited; it affects in some part that situation, but is not attempting to codify these cases anymore. Assembly Bill 427 states once you have a building permit, you cannot add any new restrictions on the person in order to get their building permit. You cannot add a restriction requiring them to give up some type of easement. It is only dealing with the building permit portion.
SENATOR RAGGIO MOVED TO DO PASS A.B. 427.
SENATOR TIFFANY SECONDED THE MOTION.
Senator Hardy:
I think it is working in southern Nevada and I do not know why this needs to be done unless there is a population cap in it.
Chairman O'Connell:
Would you like to amend the motion?
SENATOR HARDY MOVED TO AMEND THE MOTION TO DO PASS A.B. 427 TO ADD A POPULATION CAP OF 100,000 OR LESS.
SENATOR TIFFANY SECONDED THE MOTION.
Senator Titus:
I wonder what the rationale is for using this in Douglas County, but not in Clark County. Assemblyman Lynn C. Hettrick, Assembly District No. 39, wants this legislation because of something that happened in Douglas County. Why would we amend this bill with a population cap? It is either a good thing to do or it is not. I think it is not a good thing to do.
Senator Hardy:
I feel this is not a problem in Clark County. Local ordinances are handling things and to penalize local governments in Clark County would not make sense. I do not disagree, but I do not feel comfortable imposing this on local governments in southern Nevada because there have been no problems.
Chairman O'Connell:
We are voting on the amended motion.
THE MOTION FAILED. (SENATORS TITUS, CARE, O’CONNELL, AND TOWNSEND VOTED NO.)
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Chairman O'Connell:
We will go back to the original motion to do pass A.B. 427. We have a motion and a second to the motion.
THE MOTION CARRIED. (SENATORS TITUS, HARDY, AND TOWNSEND VOTED NO.)
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Chairman O'Connell:
I will open the work session on A.B. 456.
ASSEMBLY BILL 456: Revises provisions relating to employment of certain persons in connection with redevelopment projects. (BDR 22-1295)
Mr. Stewart:
This bill requires the preparation of an employment plan unless the redevelopment agency makes specific findings the plan is not appropriate for a particular redevelopment project.
SENATOR TOWNSEND MOVED TO INDEFINITELY POSTPONE A.B. 456.
SENATOR TIFFANY SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
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Chairman O'Connell:
I will open the work session on Assembly Joint Resolution (A.J.R.) 3.
ASSEMBLY JOINT RESOLUTION 3: Urges Congress to amend Social Security Act by repealing certain provisions that require reductions in social security benefits for persons who also receive certain federal, state or local government pensions. (BDR R-839)
SENATOR RAGGIO MOVED TO DO PASS A.J.R. 3.
SENATOR TOWNSEND SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
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Chairman O'Connell:
I now adjourn the meeting at 5:36 p.m.
RESPECTFULLY SUBMITTED:
Alice Nevin,
Committee Secretary
APPROVED BY:
Senator Ann O'Connell, Chairman
DATE: